Coldwell Banker, Howard Hanna spending big to reach the top
Pent-up demand, low interest rates and mild but growing price tags might be driving housing market activity, but it's ultimately a broker's investment strategy that determines their place among the leaders in closed-sale volume.
For Manheim Township-based Coldwell Banker Select Professionals, the region's No. 2 brokerage, heavy online spending to promote listings and drive sales leads, while recruiting top talent, is a priority over acquiring other firms.
That's not to say CBSP hasn't added offices. In 2011, the firm acquired Coldwell Banker Homestead Group and expanded into Berks County with a Wyomissing office. It has 10 offices and about 275 agents.
Broker Ryan Hess, one of the firm's partners, said he is more interested in people development than buying companies, comparing his internal team growth more to fantasy football.
The CBSP strategy is about premium service, Hess said.
"We believe in being the Lexus to the Toyota," he said.
The firm's increased market penetration — to the tune of $592 million in 2012 closed-sale volume, an increase of 43 percent over 2011 — can be attributed to added online partnerships.
"The Web drives listings," Hess said.
CBSP has doubled its online marketing budget each year since 2009, he said. It pays to have its listings prominently featured on the top real estate listing sites, including Zillow, Realtor.com and Trulia.
In fact, 93 percent of its property listing views in 2012 came from those three, according to CBSP data.
The Lancaster County-based firm, which trails Prudential Homesale Services Group but leads Jack Gaughen Realtor ERA in closed-sale volume in Central Pennsylvania, also has real estate partnerships with Pennlive.com and Homes.com.
And the focus now is on improving its listings further with floor-plan sketches of existing homes, Hess said.
"Anyone can show you a home and put one in the MLS," he said.
Differentiation is the key, and he believes that is being demonstrated by CBSP's commitment to marketing investments and technological services that maximize exposure for listings and give clients more options to stay involved in transactions.
Hess also equates his company's growth to its relocation division and strong relationship with about 20 builders. CBSP is a principal broker for Cartus and USAA relocation services in Central Pennsylvania.
On the flip side, Pittsburgh-based Howard Hanna Real Estate Services is hoping for at least two acquisitions this year to grow its market share in Central Pennsylvania.
"I'll be surprised if we don't do two in Central Pennsylvania," said Howard "Hoddy" Hanna III, the company's chairman and CEO, who was just in Cumberland County to recognize the family firm's regional successes in 2012.
Howard Hanna's five offices in Cumberland and Dauphin counties closed 741 transactions valued at $136.9 million in 2012, according to the company. The volume was up 32 percent compared with 2011.
The top real estate company in Pennsylvania and Ohio — and the fourth largest in the country — added offices in Ohio and entered its fifth state, Michigan, in 2012.
Howard Hanna is planning to spend $250 million over the next three years for expansion and acquisitions, he said.
That investment not only will occur in the company's current real estate and mortgage footprint — New York and West Virginia being the other two states — but also will involve expansion into new markets, Hanna said. His local goal is offices in Lancaster and York counties.
"I'm very optimistic about Central Pennsylvania," Hanna said, predicting 15 percent volume growth this year and sale price increases of 3 to 4 percent.
The company also is looking at Eastern Pennsylvania, Maryland, New Jersey and further into New York.
Howard Hanna recently added Tom Schoeller as senior vice president in charge of "branchising," mergers and acquisitions.
Branchising allows independently owned and operated real estate companies to incorporate the Howard Hanna programs and services into their business without giving up full ownership control.
Despite some concerns about a low housing inventory, Hess said he is hoping to see 20 percent unit growth this year within the firm's current six-county footprint.
Having the highest producing agents and the best reputation is more important than being the No. 1 firm for closed-sale volume, he said.
He also expects to see some growth in the company's commercial division, he said. Commercial activity is a very small portion of CBSP's sales.
"There is huge opportunity in it," Hess said. "We look for opportunities to put a solid system in where there is a vacancy."
Howard Hanna is going after that top residential spot, Hanna said. The Harrisburg market is the only one where they are not at the top of the list, he said.
"The market is certainly recovering," he said.
Hanna said he sees growth potential among first-time homebuyers who want to cash in on the interest rates before they go up.
The move-up buyer also should be coming back to the market as active listings continue falling and competitive offers grow, he said.
"It didn't happen for a few years," he said.